Vodafone slows revenue decline in Europe, overall group revenues up

It’s quarterlies season, and Vodafone confirmed its European woes are looking a little bit less woeful with revenues starting to head back in the right direction.

The group confirmed in Europe its organic service revenue has been in recovery mode, with revenue decline minimising to 1.5%, up from the 2.6% decline in the last quarter – down to more stable pricing environments and improved commercial performance, it claims. Across its mobile business last quarter’s 3.4% decline has been reduced to a 2.5% decline, with total European revenues sitting at £6.5 billion, representing an organic growth of 1.1%.

Overall group revenues for the quarter are £1.1 billion and group service revenue £9.2 billion. Vodafone claims total revenue declines 0.9%, which includes a 3.1 percentage point favourable impact based on M&A activities, while also suffering a 7.3 percentage point adverse impact due to foreign exchange fluctuations.

In the UK, specifically, Vodafone experience a slight contraction in its mobile revenue increases – down to 0.7% from 1.1% in the previous quarter – while laying claim to 4.7million 4G customers with its LTE network covering 76% of the population by Ofcom’s definition, including complete coverage across London.

Project Spring, the telco’s European network update strategy is now 71% complete, it says. It now reckons it’s upgraded 80,000 mobile sites across the continent, another 41,000 4G sites and upgraded 71,000 sites to high-capacity backhaul. It now claims its reduced the drop call rate to 0.58% across Europe down from 0.9% when the project was first announced. It now says outdoor 4G population coverage sits at 75%, up from 52% a year ago.

Elsewhere, its emerging market businesses across Africa, Middle East and Asia Pacific have increased revenues of 6.1% on the last quarter, generating just short of £3bn in revenue.

While Vittorio Colao is optimistic for the company’s future, considering this modest upturn in fortunes, he is wary of the effects external industry pressures may have on future growth.

“We have made a good start to the year,” he said. “Our emerging markets have maintained their strong momentum and more of our European businesses are returning to growth, as customer demand for 4G and data takes off. We continue to hit our Project Spring build milestones and customers are beginning to value the improvement in service that is resulting: contract churn in Europe is now falling and mobile ARPU trends are stabilising in a number of key markets. However, our markets are, as always, highly competitive and we therefore have to remain very focused on efficiency, cost control, and excellent value and service to customers, while continuing to deliver a good return for shareholders.”

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